Annual Economic Review of the Agro-processing industry in ...

DIRECTORATE: AGRO-PROCESSING SUPPORT

Annual Economic Review of

the Agro-processing industry

in South Africa.

2019 ________________________________________________________________

Volume 3, number 1

https://www.dalrrd.gov.za/

Contents

PREFACE ............................................................................................................................. i

EXECUTIVE SUMMARY ....................................................................................................... ii

1. INTRODUCTION ............................................................................................................. 1

2. THE STATE OF THE DOMESTIC ECONOMY……………………………………………….1

3. THE AGRO-PROCESSING INDUSTRY ............................................................................ 2

3.1 FOOD PRODUCTS ....................................................................................................... 3

3.2 BEVERAGES .................................................................................................................. 6

3.3 TOBACCO ................................................................................................................... 8

3.4 TEXTILES ........................................................................................................................ 9

3.5 WEARING APPAREL .................................................................................................. 12

3.6 LEATHER AND LEATHER PRODUCTS ......................................................................... 15

3.7 FOOTWEAR ................................................................................................................ 17

3.8 WOOD AND WOOD PRODUCTS ............................................................................. 20

3.9 PAPER AND PAPER PRODUCTS ............................................................................... 23

3.10 RUBBER PRODUCTS ................................................................................................. 26

3.11 FURNITURE ................................................................................................................ 28

4. CONCLUSION .............................................................................................................. 31

REFERENCES ..................................................................................................................... 33

LIST OF ACRONYMS

DALRRD Department of Agriculture, Land Reform and Rural

Development

FAO Food and Agriculture Organization

IPAP Industrial Policy Action Plan

SA South Africa

i

PREFACE

The agro-processing industry is among the sectors identified by the IPAP, the New Growth Path

and the National Development Plan for its potential to spur growth and create jobs because

of its strong backward linkage with the primary agricultural sector. DALRRD has established a

Directorate: Agro-processing Support in 2011 to complement the interventions undertaken by

several governmental departments, notably, the Department of Trade and Industry and

Competition. One of the main purposes of the directorate is to provide timely and updated

economic information regarding agro-processing industry in order to monitor the performance

of the sector and provide an insight into the effects of economic policies and exogenous

factors. To achieve this purpose, the Directorate: Agro-processing Support publishes regular

annual reviews of the agro-processing industry.

This publication Annual Economic Review of the Agro-processing Industry in South Africa by

the directorate evaluates the economic performance of the 11 agro-processing divisions

during 2019. These divisions, which are in line with the Standard Industrial Classification, are

food products, beverages, tobacco, textiles, wearing apparel, leather and leather products,

footwear, wood and wood products, paper and paper products, rubber products and

furniture. The main economic indicators reviewed are the changes in the volume of

production, sales, trade, utilisation capacity and employment.

Any comments and suggestions on the content of the publication are most welcome.

Dr Thindisa L.M.V

Director: Agro-processing Support

Pretoria

ii

EXECUTIVE SUMMARY

The South African economy saw a decline in the real gross value added in 2019. This was, in

the main, brought about a decline in the primary sector, mainly the agricultural sector.

Similarly, the output of the secondary sector shrank. In the midst of the declines, reflected

above, the output of agro-processing contracted in 2019.

During 2019, the seasonally adjusted volume of production increased for the following divisions:

footwear (11, 4%), beverages (8,0%), food products (3,5%) and paper and paper products

(0,9%). However, it contracted for the following divisions: rubber products (0,2), textiles (5,7%),

wood and wood products (7,6%), furniture (8,1%), leather and leather products (9,5%) and

wearing apparel (12,4%).

In regard to trade, the agro-processing sector’s trade deficit grew by 14,5% in 2019 from a 9,5%

growth in 2018. The following divisions registered a positive trade balance during the period

under review: food products, beverages, wood and wood products and tobacco. However,

wearing apparel, rubber products, paper and paper products, textiles, footwear, furniture,

and leather and leather products divisions have a negative trade balance.

The number of employment in the agro-processing sector contracted by 0,1% in 2019 from a

1,5% growth in 2018. This represents a number of 458 915 jobs in 2019 as compared to 459 276

jobs in 2018, which translates to about 360 jobs lost in the sector in 2019. The following divisions

shed jobs in 2019: furniture (5 367), paper and paper products (1 211) and footwear (841).

However, food (3 869), beverages (1 067), textiles (1 043), leather and leather products (492),

wood and wood products (319), wearing apparel (201) and rubber (65) divisions created jobs.

1

1. INTRODUCTION

The annual output growth slowed further, from 0,8% in 2018 to only 0,2% in 2019, the lowest

South African growth rate since the sharp contraction in 2009 following the global financial

crisis. The faster pace of contraction in the real output of the agricultural sector was the main

driver of the decrease in the real gross value added (GVA) by the primary sector in the fourth

quarter of 2019 as mining output increased somewhat. On an annual basis, both agricultural

and mining output contracted for a second successive year in 2019(SA Reserve Bank, 2021).

This annual review is organised as follows: the first section presents an overview of the state of

the South African economy. The second section gives a brief effect of the global and domestic

economic situation on the 11 divisions of the agro-processing industry, and, lastly, is the

conclusion. The variables that are analysed in the review are the volume of production, sales,

trade, employment and utilisation capacity of the 11 agro-processing divisions.

2. THE STATE OF THE DOMESTIC ECONOMY

Table 3.1 shows that the South African economic growth moderated by 0,2% in 2019 as

compared to a 0,8% growth in 2018. The slowdown in the economy is notably in the agricultural

sector, which decelerated by 6,9% in 2019 from a 4,8% contraction in 2018. The contraction

was due to the decline in the production of field crops and horticultural products as weather-

related dynamics adversely impacted the wheat harvest, soil moisture levels and the quality

of some horticultural products. Moreover, load shedding also impacted the energy-intensive

agricultural subsectors. Mining sector also decelerated in 2019 by 1,9% from a 1,7% contraction

in the preceding year (South African Reserve Bank, 2021).

Table 1: South African economic growth rate (percentage change at seasonally adjusted annualised

rates)

2018 2019

Sector Q3 Q4 YEAR Q1 Q2 Q3 Q4 YEAR

Primary sector -4.0 -1.1 -2.5 -12.3 11.7 -5.7 -0.4 -3.1

Agriculture 13.7 7.9 -4.8 -16.8 -4.7 -4.4 -7.6 -6.9

Mining -8.9 -3.8 -1.7 -10.8 17.4 -6.1 1.8 -1.9

Secondary

sector

4.9 3.0 0.5 -8.0 1.3 -5.0 -2.9 -1.4

2

Manufacturing 7.5 4.5 1.0 -8.8 2.1 -4.4 -1.8 -0.8

Tertiary sector 2.9 1.7 1.3 -0.4 2.9 0.9 -1.0 1.2

Non primary

sector

3.3 2.0 1.1 -2.1 2.5 -0.4 -1.4 0.6

Non-

agricultural

sector

2.2 1.5 0.9 -2.8 3.7 -0.8 -1.1 0.4

Total 2.6 1.4 0.8 -3.2 3.3 -0.8 -1.4 0.2

Source: Reserve Bank (2020)

3. THE AGRO-PROCESSING INDUSTRY

The Food and Agriculture Organisation defines agro-processing as a subset of manufacturing

that processes raw materials and intermediate products derived from the agricultural sector

(FAO, 19797). Therefore, the agro-processing industry transforms products originating from

agriculture, forestry and fisheries. According to the Standard Industrial Classification, the agro-

processing industry comprises of the following 11 divisions: food products, beverages,

tobacco, wearing apparel, leather and leather products, footwear, paper and paper

products, wood and wood products, rubber and furniture.

3

3.1 FOOD1 PRODUCTS

Source: Statistics SA (2020)

Figure 1 above depicts the average annual seasonally adjusted volume of production in the

food products division of the agro-processing sector. During 2019, output in the meat, fish, fruit,

etc. and ‘’other food products’’ division moderated by 2,0% and 2,8% from a 3,9% and 8,0%

growth recorded in the previous year, respectively. The output of grain mill products, on the

other hand, contracted by 0,5% in 2019 following a 2,6% growth registered in 2018, while output

for dairy products division grew by 9,7% from a 5,2% growth registered in the preceding year.


1 Food products in this case will include meat, fish, fruit etc., dairy products, grain mill products and other food

products.

0

20

40

60

80

100

120

140

Ind

ex 2

015 =

100

Figure 1: Seasonally adjusted volume of production: food products

Meat , fish, fruit etc. Dairy products Grain mill products Other food products

0

10000

20000

30000

40000

50000

60000

R m

illio

n

Figure 2: Seasonally adjusted value of sales: food products

Dairy products Grain mill products Other food products Meat , fish, fruit etc.

4

Figure 2 above shows the seasonally adjusted value of sales in the food products division,

which is comprised of meat, fish, fruit, etc., dairy products, grain mill products and “other food

products.” In 2019, meat, fish, fruit etc., and dairy products moderated by 1,6% and 2,1% as

compared to a 7,5% and 7,0% growth in 2018. However, sales of the grain mill products and

‘’other food products’’ division contracted by 0,2% and 1,5% in 2019 from a 7,4% and 7,3%

growth in 2018. The sales of food products division amounted to R175 517,3 million in 2019.

Source: Trade map (2020)

In 2019, food imports rebounded by 4,1% as compared to a 4,4% contraction in 2018. However,

food exports accelerated in growth by about 10,0% following a 7,3% growth in 2018 (see Figure

3). As a result, the trade surplus widened to R3 112,4 million in 2019 from a R5 435,8 million in

2018.

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

R m

illio

n

Figure 3: Annual trade pefomance for Food products: 2010-2019

Imports Exports

5

Table 2: Utilisation and reasons for underutilisation of production capacity by large enterprises: Food

products (percentage)

Period Utilisation Reasons for underutilisation

Total

underutilisa

tion

Shortage of Insufficient

demand

Other

Raw

materials

Labour

Skilled Semi-

and

unskilled

2017 81.8 18.3 2.2 1.4 0.4 11.0 3.4

2018 81.2 18.9 1.9 1.2 0.4 11.1 4.3

2019 81.4 18.6 2.0 1.3 0.3 10.8 4.3


The utilisation of production capacity by large enterprises in the food products division grew

marginally in 2019 as compared to 2018. The increase was by 0,2 percentage points. However,

the main reason for underutilisation during 2019 was due to insufficient demand, followed by

other reasons such as seasonal factors (see Table 2).


Figure 4 above depicts employment in the food products division during 2019. The number of

employees in the meat, fish, fruit, vegetables, oils and fats; and dairy products rebounded by

0,7% and 1,9% in 2019 from a 1,9% and 3,2% contraction in 2018, respectively. However, grain

mill products and “other food products” moderated by 0,4% and 2,9% in 2019 following a 1,1%

0

20000

40000

60000

80000

100000

120000

Em

plo

ye

es

Figure 4: Number of employment: food products

Production, processing and preservation of meat, fish, fruit, vegetables, oils and fats

Dairy products

Grain mill products, starches and starch products and prepared animal fat

Other food products

6

and 8,3% growth, respectively, in 2018. The division as a whole moderated by 1,9% in 2019 from

a 3,1% growth in 2018. As a result, the division created 3 869 jobs in 2019 from a further 6 188

jobs created in 2018.

3.2 BEVERAGES


Figure 5 shows the average seasonally adjusted volume of production in the beverages

division. In 2019, the output for beverages division grew by 8,0% following a growth of 2,2%

recorded in 2018. Since 2010, the output has been steadily rising; the highest recorded volume

of production for beverages is in 2019.


0

20

40

60

80

100

120

Ind

ex 2

015 =

100

Figure 5: Seasonally adjusted volume of production: beverages

Beverages

0

5000

10000

15000

20000

25000

30000

35000

R m

illio

n

Figure 6: Seasonally adjusted value of sales: beverages

Beverages

7

Figure 6 above demonstrates the seasonally adjusted value of sales for the beverages division.

In 2019, sales for the beverages division contracted by 3,4% as compared to a growth of 6,2%

in 2018. Sales for the division were highest in 2018 and lowest in 2010 and amounted to R29

834,3 million in 2019.


In 2019, beverages imports grew sharply by 24,8% following a growth of 19,7% in the previous

year. However, exports contracted by 2,5% in 2019 following a 3,2% growth in 2018. As a result,

the trade surplus narrowed from R10 723,6 million in 2018 to R8 252,5 million in 2019 (see Figure

7).

Table 3: Utilisation and reasons for underutilisation of production capacity by large enterprises: Beverages

(percentage)


Total

underutilisa

tion


demand

Other

Raw

materials

Labour

Skilled Semi-

and

unskilled

2017 84.9 15.1 3.4 0.9 0.3 7.8 2.8

2018 84.3 15.7 3.8 0.8 0.3 7.9 3.0

2019 85.2 14.8 3.0 0.9 0.2 8.7 2.0


0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

R m

illio

n

Figure 7: Annual trade pefomance for beverages: 2010-2019

Imports Exports

8

The utilisation of production capacity grew by 0.9 percentage points in 2019(see Table 3). The

main reasons for underutilisation was insufficient demand, followed by shortage of raw

materials and other reasons such as seasonal factors.


Figure 8 above shows the employment in the beverages and tobacco division from 2010 to

2019. During 2019, employment in the beverages and tobacco division rebounded by 2,7% as

compared to a 4,5% contraction in 2018. As a result, 1 067 jobs were created in 2019.

3.3 TOBACCO


0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

Em

plo

ye

es

Figure 8: Number of employment of beverages and tobacco products

Beverages and tobacco products

0

500

1000

1500

2000

2500

3000

3500

R m

illio

n

Figure 9: Annual trade pefomance for Tobacco: 2010-2019

Imports Exports

9

During 2019, tobacco imports contracted by 15,5% as compared to a 7,6% growth in 2018.

Tobacco exports, on the other hand, bounced back significantly by 9,0% from a 6,4%

contraction recorded in 2018. As a result, the trade balanced rebounded in 2019 to R355,0

million surplus from a trade deficit of R416,4 million in the previous year (see Figure 9).

3.4 TEXTILES


During 2019, the volume of production for the textiles division contracted by 3,9% from a 4,4%

contraction in the preceding year; other textiles, on the other hand, contracted by 7,8%

following a 1,1% growth in 2018. The division as a whole recorded a contraction of 5,7% in 2019

from a 5,9% contraction in 2018. Average annual seasonally adjusted volume of production

for textiles was highest in 2010 and lowest in 2014, while other textiles annual average output

was highest in 2010 and lowest in 2019.

0

20

40

60

80

100

120

140

Ind

ex 2

015 =

100

Figure 10: Seasonally adjusted volume of production: textiles

Textiles Other textile products

10


Figure 11 above depicts the seasonally adjusted value of sales for the textiles division. During

2019, the seasonally adjusted value of sales in the textiles and other textiles division contracted

by 6,7% and 6,4% as compared to a growth of 0,7% and 0,5% growth in 2018, respectively. The

division as a whole contracted by 6,6% in 2019 following a 0,6% growth in 2018. Sales for the

textiles and other textiles division were at their highest in 2018. The value of sales for the textiles

division as a whole amounted to approximately R32 435,9 million in 2019.


In 2019, textile imports moderated by 0,8% from a 4,8% growth recorded in the previous year.

However, textile exports contracted by 4,5% in 2019 as compared to a 7,9% growth registered

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000R

mill

ion

Figure 11: Seasonally adjusted value of sales: textiles

Textiles Other textile products

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

R m

illio

n

Figure 12: Annual trade perfomance for Textiles: 2010-2019

Imports Exports

11

in 2018. As a result, the trade deficit widened from R5 027,2 million in 2019 to R5 709,7 million in

2018 (see Figure 12).

Table 4: Utilisation and reasons for underutilisation of production capacity by large enterprises: Textiles

(percentage)


Total

underutilisa

tion


demand

Other

Raw

materials

Labour

Skilled Semi-

and

unskilled

2017 65.6 34.4 1.7 0.5 0.0 28.8 3.3

2018 66.4 33.7 1.6 0.6 0.0 28.1 3.3

2019 66.4 33.6 1.5 0.6 0.0 28.5 2.9


Table 4 illustrates the utilisation capacity by large enterprises in the textiles division. The

utilisation capacity stagnated during 2019 as compared to 2018. Insufficient demand remains

the main reason for underutilisation in 2019, followed by other reasons such as a decline in

production volume.


Figure 13 above shows the number of employment in the textiles division in 2019. The number

of employment in the preparation and spinning of textiles somewhat contracted by 0,8% in

2019 as compared to a 10,6% contraction in 2018. Other textiles division, on the other hand,

0

5000

10000

15000

20000

25000

30000

Em

plo

ye

es

Figure 13: Number of employment : textiles

Preparation and spinning of textile fibres; weaving of textiles Other textiles

12

rebounded by 5,3% in 2019 from a 4,1% contraction in 2018. The division a s a whole rebounded

by 3,7% in 2019 from a 5,9% contraction registered in the previous year. As a result, the textiles

division as a whole created 1 043 jobs in 2019 as compared to 1 777 jobs lost in 2018.

3.5 WEARING APPAREL


During 2019, the average annual seasonally adjusted volume of production in the knitted,

crocheted articles division contracted by 9,4% from a 0,7% growth in the preceding year. The

volume of production for wearing apparel, on the other hand, contracted by 4,1% in 2019

following a 4,8% contraction in 2018. From 2010, the knitted and crocheted articles division

has been declining in output and was recorded at highest in 2010 and lowest in 2019. Wearing

apparel output, however, appears to in decline albeit at a slower pace, with the highest

output registered in 2010 and lowest output in 2019 (see Figure 14).

0

20

40

60

80

100

120

140

160

180

200

Ind

ex 2

015 =

100

Figure 14: Seasonally adjusted volume of production: wearing apparel

Knitted, crocheted articles Wearing apparel

13


In 2019, the annual seasonally adjusted value of sales in the knitted and crocheted articles

and wearing apparel division contracted by 5,6% and 5,5% from a 1,3% and 1,5% growth in

2018, respectively. Knitted and crocheted articles sales were highest in 2018 and lowest in 2010.

Similarly, sales for wearing apparel division were highest in 2018 and lowest in 2010. The

combined value of sales for division as a whole amounted to R28 849,3 million in 2019 (see

Figure 15).


During 2019, the wearing apparel division imports grew by 9,9% following a 9,6% growth in 2018.

Similarly, exports grew marginally by 4,5% in 2019 following a 1,2% growth in 2018. As a result,

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

R m

illio

nFigure 15: Seasonally adjusted value of sales: wearing apparel

Knitted, crocheted articles Wearing apparel

0

5000

10000

15000

20000

25000

30000

R m

illio

n

Figure 16: Annual trade pefomance for wearing apparel: 2010-2019

Imports Exports

14

the trade deficit widened from R18 7665,0 million in 2018 to R20 924,6 million in 2019 as Figure

16 shows.

Table 5: Utilisation and reasons for underutilisation of production capacity by large enterprises: Wearing

apparel (percentage)


Total

underutilisa

tion


demand

Other

Raw

materials

Labour

Skilled Semi-

and

unskilled

2017 75.8 24.2 0.6 1.4 0.4 18.4 3.6

2018 75.4 24.6 0.6 1.4 0.4 18.8 3.5

2019 75.6 24.4 0.6 1.4 0.4 18.6 3.5


Table 5 above shows that the utilisation capacity grew marginally in 2019. It grew by 0,2

percentage points. Insufficient demand still remains the main reason for underutilisation of

production capacity during 2019, followed by other reasons such as seasonal factors.


During 2019, the number of employees in the knitted and crocheted articles division declined

by 1,3% from a 3,4% contraction in 2018. However, the wearing apparel division moderated by

0

10000

20000

30000

40000

50000

60000

Em

plo

ye

es

Figure 17: Number of employment: wearing apparel

Knitted and crocheted fabrics and articles

Wearing apparel, except fur;dressing and dying of fur, articles of fur

15

0,7% in 2019 as compared to a 1,4% growth in 2018. The division as a whole moderated by 0,5%

in 2019 following a 0,7% growth in 2019. As a result, 201 jobs were created in 2019 from a further

326 jobs created in 2018 (see Figure 17).

3.6 LEATHER AND LEATHER PRODUCTS


Figure 18 above illustrates the seasonally adjusted volume of production in the leather and

leather products division. During 2019, the output in the leather and leather products division

decelerated by 9,5% from a 2,5% contraction in 2018. In 2014, production in leather and

leather products division was at its peak, but subsequent to 2015, it shows a decline trend.


0

20

40

60

80

100

120

Ind

ex 2

015 =

100

Figure 18: Seasonally adjusted volume of production: leather and leather

products

Leather and leather products

0

2000

4000

6000

8000

10000

12000

14000

16000

R m

illio

n

Figure 19: Seasonally adjusted value of sales: leather and leather products


16

Figure 19 above presents the value of sales in the leather and leather products division. During

2019, the seasonally adjusted value of sales in the leather and leather products division

contracted by 6,1% following a 2,6% growth in 2018. Sales for leather and leather products

division were highest in 2018 and lowest in 2010 and amounted to R12 804,4 million in 2019.


In 2019, the leather and leather products division imports moderated by 1,4% from an 9,1%

growth registered in 2018. However, exports of leather and leather products decelerated by

18,7% in 2019 as compared to a 13,0% contraction in 2018. As a result, the trade deficit

widened to R2 435,1 million in 2019 from R2 649.0 million in 2018 (see Figure 20).

Table 6: Utilisation and reasons for underutilisation of production capacity by large enterprises: Leather

and leather products (percentage)


Total

underutilisa

tion


demand

Other

Raw

materials

Labour

Skilled Semi-

and

unskilled

2017 72.8 27.2 4.7 0.7 1.3 18.8 1.9

2018 71.2 28.8 4.8 0.6 1.2 20.7 1.6

2019 61.9 38.2 3.4 0.6 1.2 29.0 4.1


0

500

1000

1500

2000

2500

3000

3500

4000

R m

illio

n

Figure 20: Annual trade pefomance for leather and leather products:

2010-2019

Imports Exports

17

The utilisation of production capacity in the leather and leather products division decreased

in 2019 by 9,3 percentage points (see Table 6). Insufficient demand remained the main reason

for underutilisation, followed by other reasons such as seasonal factors.


Figure 21 above illustrates the number of employment in the leather and leather products

division in 2019. The number of employment in the leather and leather products division

rebounded by 9,7% in 2019 from a 2,2% contraction registered in 2018. As a result, 492 jobs

were created in the division in 2019 as compared to 114 jobs lost in 2018.

3.7 FOOTWEAR


0

1000

2000

3000

4000

5000

6000

Em

plo

ye

es

Figure 21: Number of employment: leather and leather products


84

86

88

90

92

94

96

98

100

102

104

Ind

ex 2

015 =

100

Figure 22: Seasonally adjusted volume of production: footwear

Footwear

18

Figure 22 above shows the seasonally adjusted volume of production in the footwear division.

In 2019, the volume of production for the footwear division rebounded by 11,4% as compared

to a 2,9% contraction in 2018. The volume of production for the footwear division has been

characterized by fluctuations over the past ten years, which peaked in 2014, while the lowest

volume of production was recorded in 2018.


The seasonally adjusted value of sales in the footwear division in 2019 contracted by 5,3% as

compared to a growth of 3,1% in the preceding year. The value of sales for the footwear

division was approximately R12 339,4 million in 2019. Sales were highest in 2018 and lowest in

2010 (see Figure 23).

0

2000

4000

6000

8000

10000

12000

14000

R m

illio

n

Figure 23: Seasonnaly adjusted value of sales: footwear

Footwear

19


In 2019, the footwear imports moderated by 3,8% as compared to a 7,5% growth in the

preceding year. The exports of footwear, on the other hand, rebounded by 3,1% in 2019 as

compared to a 6,5% contraction registered in the previous year. As a result, the trade deficit

widened from R10 039,4 million in 2018 to R10 441,1 million in 2019 (see Figure 24).

Table 7: Utilisation and reasons for underutilisation of production capacity by large enterprises: Footwear

(percentage)


Total

underutilisa

tion


demand

Other

Raw

materials

Labour

Skilled Semi-

and

unskilled

2017 84.3 15.7 2.0 0.9 0.0 12.6 0.3

2018 87.1 13.0 1.3 0.5 0.0 11.2 0.0

2019 86.7 13.3 1.6 0.9 0.0 10.0 0.8


The utilisation of production capacity in the footwear division declined by 0,4 percentage

points in 2019(see Table 7). Insufficient demand remained the key reason for underutilisation,

which is followed by shortage of raw material and shortage of skilled labour.

0

2000

4000

6000

8000

10000

12000

14000

R m

illio

nFigure 24: Annual trade pefomance for footwear

: 2010-2019

Imports Exports

20


Figure 25 above shows the number of employment in the footwear division. In 2019,

employment in the footwear division decelerated by 9,2% from a 4,0% contraction in 2018. This

resulted in 841 more job losses in the division in 2019 compared to about 375 jobs lost in 2018.

3.8 WOOD AND WOOD PRODUCTS


During 2019, the seasonally adjusted volume of production in the sawmilling and planning of

wood division decelerated by 7,1% from a 2,9% contraction in 2018. The volume of production

for products of wood, on the other hand, contracted by 3,8% in 2019 following a 2,5% growth

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Em

plo

ye

es

Figure 25: Number of employment: footwear

Footwear

0

20

40

60

80

100

120

Ind

ex 2

015 =

100

Figure 26: Seasonnaly adjusted volume of production: wood and wood

products

Sawmilling and planing of wood Products of wood

21

registered in 2018. The division as a whole decelerated by 7,6% in 2019 from a 3,8% contraction

in 2018 (see Figure 26). Sawmilling and planning of wood output was highest in 2017 and lowest

in 2010, while products of wood output was highest in 2018 and lowest in 2010.


As shown in Figure 27, the value of sales for sawmilling and planning of wood and products of

wood both contracted by 5,1% in 2019 as compared to a growth of 2,0% and 3,3% respectively

in 2018. The division as a whole contracted by 5,1% in 2019 from a growth of 2,6% in 2018. Sales

for sawmilling and planning of woods were highest in 2018 and lowest in 2010. Similarly, the

sales for products of wood division were highest in 2018 and lowest in 2010. The value sales

amounted to R22 904.3 million in 2019.

0

2000

4000

6000

8000

10000

12000

14000

R m

illio

n

Figure 27: Seasonally adjusted value of sales: wood and wood products,

2010- 2019

Sawmilling and planing of wood Products of wood

22

Source: trade map, (2020)

In 2019, imports of wood and wood products moderated by 3,9% from a 5,1% growth in the

previous year. However, exports of wood and wood products, on the other hand, contracted

by 3,8% in 2019 following an 8,8% growth in 2018. As a result, the trade surplus narrowed from

R2 714,3 million in 2018 to R2 222,7 million in 2019 (see Figure 28).


During 2019, the number of employment in the wood and wood products division moderated

by 0,7% following a growth of 6,7% registered in 2018. As a result, the division created 319 jobs

during the period under review as compared to 2 809 jobs created in 2018 (see Figure 29).

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

R m

illio

nFigure 28: Annual trade pefomance for wood and wood products: 2010-

2019

Imports Exports

0

5000

10000

15000

20000

25000

30000

35000

Em

plo

ye

es

Figure 29: Number of employment: wood and wood products

Sawmilling and planing of wood Products of wood, cork, straw and plaiting materials

23

Table 8: Utilisation and reasons for underutilisation of production capacity by large enterprises: Wood and

wood products (percentage)


Total

underutilis

ation


demand

Other

Raw

materials

Labour

Skilled Semi-

and

unskilled

2017 84.2 15.9 1.5 0.9 0.0 8.9 4.6

2018 82.7 17.3 1.6 0.8 0.0 9.1 5.8

2019 82.6 17.4 2.0 0.8 0.0 10.1 4.5


Table 8 shows that the utilisation capacity for wood and wood products division declined

during 2019. The decline is about 1,0 percentage points. Insufficient demand remained the

key reason for underutilisation during the period under review, followed by other reason such

as lower productivity.

3.9 PAPER AND PAPER PRODUCTS


Figure 30 above shows the annual seasonally adjusted volume of production in the paper and

paper products division. The seasonally adjusted volume of production in the paper and paper

products division rebounded by 0,9% in 2019 from a contraction of 0,2% in 2018. The division

output was highest in 2016 and lowest in 2010.

90

92

94

96

98

100

102

104

Ind

ex 2

015 =

100

Figure 30: Seasonally adjusted volume of production: paper and paper

products

Paper and paper products

24


During 2019, the value of sales in the paper and paper products division contracted by 6,5%

as compared to a 5,0% growth recorded in 2018. Sales of paper and paper products division

were highest in 2018 and lowest in 2010. Sales amounted to about R9 202,0 million in 2019 (see

Figure 31).


In 2019, the imports of paper and paper products division moderated by 5,4% from a 17,1%

growth in 2018. However, exports of paper and paper products contracted by 7,5% in 2019

from a growth of 11,7% in 2018. As a result, the trade deficit widened from R4 870,6 million in

2018 to R6 339,4 million in 2019 (see Figure 32).

0

2000

4000

6000

8000

10000

12000

R m

illio

nFigure 31: Seasonally adjusted value of sales: paper and paper products


0

2000

4000

6000

8000

10000

12000

14000

16000

R m

illio

n

Figure 32: Annual trade pefomance for paper and paper products: 2010-

2019

Imports Exports

25

Table 9: Utilisation and reasons for underutilisation of production capacity by large enterprises: Paper and

paper products (percentage)


Total

underutilis

ation


demand

Other

Raw

materials

Labour

Skilled Semi-

and

unskilled

2017 87.1 12.9 0.6 1.3 0.0 6.0 5.1

2018 86.5 13.6 0.9 1.4 0.0 6.3 5.0

2019 85.8 14.2 0.6 1.3 0.0 7.2 5.1


The utilisation of production capacity by large enterprises in the paper and paper products

division declined by 1,0 percentage point in 2019 (see Table 9). Insufficient demand remained

the main reasons for underutilisation of production capacity, followed by other reasons such

as seasonal factors.


During 2019, the employment in the paper and paper products division contracted by 3,4% as

compared to a 4,6% contraction in 2018. As a result, 1 211 jobs were lost in 2019 as compared

to a greater loss of 1 691 jobs lost in 2018 (see Figure 33).

30000

32000

34000

36000

38000

40000

42000

Em

plo

ye

es

Figure 33: Number of employment: paper and paper products


26

3.10 RUBBER PRODUCTS


As shown in Figure 34 above, the volume of production in the rubber division declined by 0,2%

in 2019 from a 1,9% contraction in 2018. The output for the division was highest in 2012 and

lowest in 2010.


Figure 35 above demonstrates the seasonally adjusted value of sales in the rubber products

division. In 2019, the value of sales in the rubber products rebounded by 0,6% as compared to

a 5,8% contraction in 2018. The value of sales for rubber products were highest in 2017 and

0

20

40

60

80

100

120

140

Ind

ex 2

015 =

100

Figure 34: Seasonally adjusted volume of production: rubber

Rubber products

0

500

1000

1500

2000

2500

3000

3500

R m

illio

n

Figure 35: Seasonally adjusted value of sales: rubber products

Rubber products

27

lowest in 2010. During 2019 the value of sales for rubber products were approximately R2 825,0

million.


During 2019, the imports of rubber products moderated by 3,2% as compared to a 9,5% growth

in 2018. However, rubber products exports rebounded by 3,0% in 2019 from a contraction of

3,9% in 2018 (see Figure 36). South Africa has a trade deficit in rubber products division, which

continue to widen as imports increase while exports appear to stagnate, therefore trade

deficit widened to R 11 048,1 million in 2019 form R 11408.6 million in 2018.

Table 10: Utilisation and reasons for underutilisation of production capacity by large enterprises: Rubber

products (percentage)


Total

underutilisa

tion


demand

Other

Raw

materials

Labour

Skilled Semi-

and

unskilled

2017 83.8 16.2 0.4 2.8 0.0 11.2 2.0

2018 84.1 16.0 0.4 2.6 0.0 10.7 2.4

2019 83.5 16.5 1.2 4.2 0.0 9.7 1.5


0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

R m

illio

n

Figure 36: Annual trade perfomance for rubber products products: 2010-

2019

Imports Exports

28

The utilisation of production capacity for rubber products division declined by 0,6 percentage

points (see Table 10). Insufficient demand remains the main reason for underutilisation of

production capacity in the division in 2019, followed by shortage of skilled labour.


Figure 37 above illustrates employment in the rubber products division. In 2019, the

employment in the rubber products division rebounded by 0,5% as compared to a 2,1%

contraction in 2018. As a result, 65 more jobs were created in the division in 2019 as compared

to 274 jobs lost in 2018.

3.11 FURNITURE


10000

10500

11000

11500

12000

12500

13000

Em

plo

ye

es

Figure 37: Number of employment: rubber products

Rubber products

0

20

40

60

80

100

120

Ind

ex 2

015 =

100

Figure 38: Seasonally adjusted volume of production: furniture

Furniture

29

Figure 38 illustrates the seasonally adjusted volume of production for furniture division. During

2019, the volume of production in the furniture division decelerated by 8,1% from a 1,1%

contraction in 2018. The furniture division volume of production was lowest in 2019 but reached

its peak in 2014.


As illustrated in Figure 39, the value of sales in the furniture recorded an improved contraction

of approximately 5,0% in 2019 as compared to a contraction of about 9,2% in 2018. The value

of sales reached its peak around 2017, however the lowest sales value was record in 2010.

Source: Trade map (2020

0

200

400

600

800

1000

1200

1400

1600

1800

R m

illio

n

Figure 39: Seasonally adjusted value of sales: furniture

Furniture

0

2000

4000

6000

8000

10000

12000

R m

illio

n

Figure 40: Annual trade pefomance for Furniture: 2010-2019

Imports Exports

30

In 2019, the furniture imports moderated by 4.8% as compared to a 9,0% growth in 2018.

However, exports contracted by 5,0% from a 4,2% growth in 2019. As a result, the trade deficit

widened from R4 791.3 million in 2018 to R5 558.2 million in 2019.

Table 11: Utilisation and reasons for underutilisation of production capacity by large enterprises: Furniture

(percentage)


Total

underutilisa

tion


demand

Other

Raw

materials

Labour

Skilled Semi-

and

unskilled

2017 85.4 14.6 0.9 0.0 1.6 11.9 0.3

2018 86.1 13.9 0.7 0.0 1.4 11.8 0.0

2019 82.4 17.7 0.8 0.0 1.7 15.2 0.0


During 2019, the utilisation capacity in the furniture division declined by 3,7 percentage points.

Insufficient demand was the main reason for underutilisation of production capacity in 2019,

followed by shortage of semi-and unskilled labour (see Table 11).


0

5000

10000

15000

20000

25000

30000

35000

Em

plo

ye

es

Figure 41: Number of employment: furniture

Furniture

31

Figure 41 depicts employment for the furniture division in 2019. The employment in the furniture

division contracted by 16,7% in 2019 as compared to a growth of 12,3% in 2018. As a result, 5

367 jobs were lost in the division in 2019 as compared to 3 514 jobs created in 2018.

4. CONCLUSION

The South Africa’s real gross value added declined in 2019, this was mainly due to the decline

in growth in the primary, secondary and tertiary sector. Notably, in the primary sector, was the

decline in the agricultural sector. Similarly, in regard to the agro-processing sector, the

seasonally adjusted volume of production of the agro-processing sector contracted by 0,5%

in 2019, following a 0,2% growth registered in the previous year.

In respect to agro-processing division, the seasonally adjusted volume of production

contracted for wearing apparel division, while it decelerated for leather and leather products,

wood and wood products; and furniture divisions, respectively, in 2019. Moreover, footwear

and paper and paper products divisions’ volume of production rebounded, but textiles and

rubber products divisions recorded an improved negative growth as compared to the

previous year’s contraction. Lastly, the food products division, owing to its uniqueness in the

face of decline economic activities, still moderated in its volume of production in 2019.

Concerning sales, again noting a decline in economic activities during 2019, most of the agro-

processing divisions realised negative sales growth. These divisions are beverages, wood and

wood products, textiles, wearing apparel, leather and leather products, footwear and paper

and paper products. However, sales for rubber division rebounded, while furniture registered

an improved negative growth as compared to the previous year’s contraction. Similar to

moderation in growth of volume of production for food products, value of sales moderated in

growth.

In terms of trade for the agro-processing sector, South Africa has a negative trade balance.

Trade deficit increased by 15,0% in 2019 following a 9,6% growth in 2018. The divisions where

trade deficit widened during the period under review were textiles, wearing apparel, leather

and leather products, footwear, paper and paper products, rubber and furniture. However,

beverages and wood and wood products divisions’ trade surplus balance narrowed, while

food division’s trade surplus widened.

Lastly, the number of employment in the agro-processing sector contracted by 0,1% in 2019

from a 1,5% growth in 2018, which translates to about 360 jobs lost. The following divisions shed

jobs during 2019: footwear, paper and paper products and furniture. However, jobs were

32

created in the food products, beverages, textiles, wearing apparel, leather and leather

products, wood and wood products and rubber divisions.

33

REFERENCES

FAO (1997), the State of Food and Agriculture. Rome: Food and Agriculture Organization.

SA Reserve Bank (2021), Various Quarterly Economic Reviews. South African Reserve Bank.

Statistics SA (2021), Manufacturing: Utilisation of Production Capacity by Large Enterprises.

Statistics SA: (2021) Volume of production and sales

Statistics SA: (2021), quarterly employment statistics

ITC Trade Map, (2020). Exports and imports. Available from URL: http://www.trademap.org

This document has been compiled by the Department of Agriculture, Land Reform and Rural Development and every

effort has been made to ensure the accuracy and thoroughness of the information contained herein and the

department cannot be held responsible for any errors, omissions or inaccuracies in such information and data,

whether inadvertent or otherwise. The Department of Agriculture, Land Reform and Rural Development therefore

accepts no liability that can be incurred resulting from the use of this information.

34

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Annual Economic Review of the Agro-processing industry in ...

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